SINGAPORE, June 13 (Xinhua) — Monetary authorities in emerging economies are closely watching the impact of the capital outflows amid market expectation that the Federal Reserve’s exit from the quantitative easing may be close, though analysts say it is most likely a short-term adjustment.

It is estimated that at least 2.5 billion U.S. dollars have moved out of the Indian equities market since mid-May, leading to a significant softening of the rupee, said Tommy Xie, an economist with Singapore-based OCBC Bank.

The capital outflow from Thailand is estimated to total over 2 billion U.S. dollars since mid-May. Indonesia is believed to have seen an outflow of 500 million dollars from the stock market and 300 million dollars from the rupiah-denominated bonds market in the first week of June.

The benchmark Straits Times Index of the Singapore stock market shed a total of 8.7 percent over the past three weeks, while Indonesian stock market lost 9.9 percent and the Thai market lost 12.8 percent, respectively.

The yields of the local currency bonds are going up, too.

The weakness of both the stock markets and the bond markets leads to depreciation pressure on the currencies of emerging economies, with the Indian rupee down 7.5 percent since early May.

The Singapore dollar has been moving up and down, too, albeit within a managed range of about 3 percentage points.

Analysts said they expect the capital outflow to be “a short period of adjustment,” though further weakness in the local currencies of some of the economies may be expected in the short term.

The adjustment in the equities markets in Southeast Asia is more likely a correction triggered by the expectation on the exit of the Fed from its quantitative easing, said Chang Chiou Yi, regional strategist at CIMB Research.

Xie also said that it is partly attributable to profit taking around the middle of the year following significant gains.

“My opinion is that it’s most likely to be a short-term outflow, (resulting from) adjustment of their positions. I don’t think it will last long,” he said.

The stock markets in Southeast Asia have accumulated significant gains over the past months prior to the current adjustment. The STI index still has a 16 percent gain over the past 12 months despite the correction, while the Thai stock market still has a gain of 27 percent.

There had been capital inflows to the regional bonds market that were somewhat beyond the support of the fundamentals, too, Chang said.

Despite the market talks of the Fed’s exit from QE, the analysts said the unwinding is most likely to be gradual. The sudden repricing of the U.S. Treasury bonds is only a trigger.

“There are no crises or liquidity crunch kind of concern such as what we are seeing in Europe. This is pretty much led by the Fed thinking that because my growth is improving, I think I am willing to let my bond yields rise a little,” Chang said.

The annual yields of the ten-year Treasury bonds has moved up to around 2.2 percent recently, but Chang said it would harm the U. S. economic recovery if it moves to anywhere near 4 percent.

“They cannot afford to let it go up too much. So I don’t think it will lead to a crisis. I think it is just a period of adjustment,” she said.

Xie said he did not expect the Fed to raise the interest rates before 2015.

“I don’t think there will be a crisis,” he said. “The inter- bank lending market does not seem to be affected much, either.”

Both Xie and Zhang cited the sound fundamentals of the emerging economies. They shall be able to absorb higher bond yields once their economic outlook improves with the major economies such as the United States as well as China, which is still showing signs of weakness.

Nevertheless, Chang said she expects to see further weakness in the currencies of the emerging economies in the near term.

“If the swings are really so wild, leading to risks of a monetary crisis, authorities should indeed step in to intervene when it’s necessary,” Xie said.

Indonesia’s central bank stepped in to intervene on Tuesday by raising the interest rates and increasing the supply of U.S. dollars.

Xie said there used to be a wave of capital outflows from the emerging markets in 2011 when the sovereign debt risks broke out in Europe, forcing the banks to reduce their leverage.

The current outflow is seen as substantially different from the monetary crisis in 1997. Xie said the countries in Southeast Asia now have more foreign exchange reserves, better political environment and, more importantly, local currency bond markets that provide an alternative financing channel to the U.S. dollar debt market.

Peace Through Tourism

How Travel & Tourism Can Help Restore the Balance in the Emerging New World Order

"The travel & tourism buzzword of the 21st century will be the search for balance."

That forecast was made by Imtiaz Muqbil, Executive Editor, Travel Impact Newswire, in the monthly strategic intelligence publication of PATA, the Pacific Asia Travel Association, way back in February 1999. Today, it is proving spot-on as the word "balance" resonates across all industry sectors.

Travel industry conferences seeking a speaker who can offer some unique historical hindsight, unconventional foresight and thought-provoking insight on how to rebuild and restore the balance in Asia Pacific travel & tourism can email Imtiaz Muqbil by clicking here.

There Can Be No Sustainability Without Spirituality

The New World Order will be dominated by a resurgence of spirituality.

Imtiaz Muqbil claims to be the world's only travel journalist to have visited the Holy Spots of all the major world religions -- Lumbhini, Bodhgaya, Varanasi, Nalanda, Jerusalem, Vatican City, Amritsar, Makkah, Madinah, Najaf and Karbala, as well as religious spots such as Angkor Wat, Bagan, Shwedagon Pagoda, Temple of the Emerald Buddha, Temple of The Tooth, Somnath Temple, Samarkand, Bukhara and many other great mosques, shrines, temples and cathedrals worldwide.

Sustainability, ecotourism and health & wellness travel have all become so 'yesterday'. Prepare for the new generation of travel in the New World Order and raise the bar of your next conference, management forum or seminar by hearing Imtiaz Muqbil's thoughts on this unmatched game- and life-changing experience.

==========

Secrets of Thailand's Tourism Success

Why the Amazing Kingdom is notching up record-breaking arrivals, and what challenges it faces next

The Thai tourism industry has become by far the Kingdom's most successful service sector, one of its leading job-creators and foreign exchange-earners. Behind this success lies a fascinating history of great branding campaigns, policy and regulatory changes, budgetary bunfights, strategic thinking and influence of Royal events.

But this success has now bred a new set of management challenges that may be more difficult to overcome.

Travel Impact Newswire Executive Editor Imtiaz Muqbil has been monitoring the pulse of the Thai travel industry full-time since 1981. Industry conferences and management meetings wishing to benefit from a treasure trove of insights and hindsights on one of the world's great tourism success stories can drop an email here: imtiaz@travel-impact-newswire.com.

============

The Rise of the Whistle-Blowers

For 15 years (January 1997-July 2012), Imtiaz Muqbil penned a hard-hitting fortnightly column called “Soul-Searching” in the so-called “newspaper you can trust”. In July 2012, the column was gagged, with no explanation.

Over the years, four columns had explicitly forecast the rise of whistle-blowers -- a prediction now coming 100% true. Read the four columns by clicking on the links below.

Too Bad Your Ad Is Not in This Spot

Space available for unique ads that demonstrate commitment to helping physically-challenged people, building global peace, improving social and cultural cohesion, providing opportunities for the under-privileged, alleviating poverty and combatting global injustice & corruption.

If your product is not meeting any of the above goals, please advertise elsewhere.

===============

News Vs Noise

A Unique Course for Travel & Tourism Communicators In The Internet Era

By far the vast majority of media communications in the travel industry is boring, banal and bland. The same way it has been for the last 30 years.

Travel Impact Newswire Executive Editor Imtiaz Muqbil has designed a special communications course to help upgrade both the context and the content of industry media material, and make it more interesting, readable and, most important, relevant.